Monotype Imaging Completes Acquisition of Bitstream's Font Business
WOBURN, Mass., Mar 19, 2012 (BUSINESS WIRE) -- Monotype Imaging Holdings Inc.
(TYPE), a leading global provider of text imaging solutions, today announced it
has completed its acquisition of Bitstream Inc.'s font business in an all cash
merger valued at approximately $50 million, subject to adjustments based on the
closing net asset value of the company.
"This is a great day in our history," said Doug Shaw, president and chief
executive officer of Monotype Imaging. "Our mission is to be the first place to
turn for typefaces, technology and expertise that enable the best user experience
and ensure brand integrity regardless of device, platform or language. We're
excited to welcome Bitstream's team of experts to Monotype Imaging --
professionals who care as passionately about type as we do."
Monotype Imaging's global reach and financial strength, combined with Bitstream's
strong online font store and OEM business, position Monotype Imaging to serve
broader markets, while addressing a wider range of customer needs. The
acquisition is expected to strengthen Monotype Imaging's products and services,
while providing customers with improved choice and flexibility.
Included in the acquisition is the popular MyFonts.comsm website, featuring
89,000 fonts from nearly 900 foundries, in addition to the widely used
WhatTheFontsm identification service. The transaction also includes the
Bitstream? typeface library, the company's Font Fusion? and Bitstream Panorama
font rendering and layout technologies, a range of fonts for embedded and mobile
environments, and 10 patents. Thirteen employees from Bitstream's U.S.
operations, in addition to 42 Bitstream engineers and type designers who work in
Noida, India, are joining Monotype Imaging, providing the company with an
expanded global presence.
Expected financial impact from the acquisition of Bitstream's font business
Based on the timing of the close of the acquisition of Bitstream's font business,
Monotype Imaging expects the financial impact to be immaterial to the first
quarter of 2012 and is reiterating the financial guidance that was provided on
Feb. 16, 2012. For the first quarter, the company continues to expect revenue in
the range of $32.5 million to $34.0 million, non-GAAP net adjusted EBITDA in the
range of $13.5 million to $14.5 million, GAAP earnings per diluted share in the
range of $0.15 to $0.17 and non-GAAP earnings per diluted share in the range of
$0.21 to $0.23.
For the full year 2012, Monotype Imaging expects Bitstream's font business to
contribute approximately $13.0 million to $14.0 million in revenue and $2.0
million to $3.0 million in net adjusted EBITDA. The full year 2012 impact from
the Bitstream acquisition includes the purchase accounting write-down of deferred
revenue, the alignment of Bitstream's revenue recognition policies with Monotype
Imaging's policies and integration costs. Total revenue is now expected to be in
the range of $146.0 million to $151.0 million, up from prior guidance of $133.0
million to $137.0 million. Net adjusted EBITDA is now expected to be in the range
of $59.0 million to $63.0 million, up from prior guidance of $57.0 million to
$60.0 million. The acquisition is expected to be neutral to GAAP earnings per
diluted share in the range of $0.68 to $0.73, and non-GAAP earnings per diluted
share is now expected to be in the range of $0.96 to $1.01, up from prior
guidance of $0.93 to $0.98.
A reconciliation of GAAP measures to non-GAAP measures for the three months ended
March 31, 2012 and the full year 2012 is provided in the financial tables that
accompany this release.
Conference call details
Monotype Imaging will host a conference call for financial analysts and
shareholders tomorrow, March 20, 2012, at 8:00 a.m. EDT to discuss the company's
acquisition of Bitstream's font business. Individuals who are interested in
listening to the audio webcast should go to the Investor Relations portion of the
About Us section of Monotype Imaging's website at monotypeimaging.com.
The live call can also be accessed by dialing 1-866-225-8754 (domestic) or
1-480-629-9818 (international) using passcode 4525767. If individuals are unable
to listen to the live call, the audio webcast will be archived in the Investor
Relations portion of the company's website for one year.
Forward-looking statements
This press release contains certain forward-looking statements about Monotype
Imaging, including statements that involve risks and uncertainties concerning
Monotype Imaging's operation of Bitstream's business after the acquisition.
Actual events or results may differ materially from those described, expressed or
implied in this press release due to a number of risks and uncertainties, many of
which are beyond the control of Monotype Imaging. The potential risks and
uncertainties include, among others, risks related to our ability to integrate
the Bitstream business with Monotype Imaging's business, the possibility that the
financial performance of the business will fail to meet expectations, general
economic conditions, industry specific conditions and the possibility that
Monotype Imaging may be adversely affected by other economic, business or
competitive factors. In addition, information is available in the documents that
Monotype Imaging and Bitstream, respectively, file with the SEC on Forms 10-K,
10-Q and 8-K. These filings identify and address other important factors that
could cause Monotype Imaging's financial and operational results to differ
materially from those contained in the forward-looking statements set forth in
this document. Accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if any
of them do so, what impact they will have on the results of operations or the
financial condition of Monotype Imaging. The company is under no duty to update
any of the forward-looking statements after the date of this press release to
conform to actual results.
About Monotype Imaging
Monotype Imaging combines technology with design to help the world communicate.
Based in Woburn, Mass. with offices in the U.S., Europe and Asia, Monotype
Imaging brings text imaging and graphical user interface capabilities to consumer
electronics devices such as laser printers, copiers, mobile phones, e-book
readers, tablets, automotive displays, digital cameras, navigation devices,
digital televisions, set-top boxes and consumer appliances. The company also
provides printer drivers, page description language interpreters, printer user
interface technology and color imaging solutions to printer manufacturers and
OEMs (original equipment manufacturers). Monotype Imaging technologies are
combined with access to more than 15,000 typefaces from the Monotype?, Linotype?
and ITC? typeface libraries -- home to some of the world's most widely used
designs, including the Times New Roman?, Helvetica?, Frutiger? and ITC Franklin
Gothic typefaces. Fonts are licensed to creative, business and Web professionals
through e-commerce portals, direct and indirect sales and custom design services.
Monotype Imaging offers industry-standard font solutions that support all of the
world's major languages. Information about Monotype Imaging can be found at
monotypeimaging.com.
Monotype is a trademark of Monotype Imaging Inc. registered in the U.S. Patent
and Trademark Office and may be registered in certain jurisdictions. Times New
Roman is a trademark of The Monotype Corp. registered in the U.S. Patent and
Trademark Office and may be registered in certain jurisdictions. Linotype is a
trademark of Linotype GmbH registered in the U.S. Patent and Trademark Office and
may be registered in certain jurisdictions. Helvetica and Frutiger are trademarks
of Linotype Corp. registered in the U.S. Patent and Trademark Office and may be
registered in certain jurisdictions in the name of Linotype Corp. or its licensee
Linotype GmbH. ITC is a trademark of International Typeface Corp. registered in
the U.S. Patent and Trademark Office and may be registered in certain
jurisdictions. ITC Franklin Gothic is a trademark of International Typeface Corp.
and may be registered in certain jurisdictions. Font Fusion, Pageflex and BOLT
are either registered trademarks or trademarks of Marlborough Software
Development Holdings Inc. Bitstream, WhatTheFont and Panorama are registered
trademarks or trademarks of Bitstream Inc. MyFonts and MyFonts.com are registered
service marks of Bitstream Inc. All other trademarks are the property of their
respective owners. ?2012 Monotype Imaging Holdings Inc. All rights reserved.
FREQUENTLY ASKED QUESTIONS
1. Who is Bitstream?
Bitstream was founded in 1981 as a font foundry and evolved to developing
software and applications for the graphic arts and mobile communications
industries. Bitstream's fonts and font technologies enabled device manufacturers
and application developers to render the highest-quality text in any language, on
any device, at any resolution. Bitstream's MyFonts brand is one of the world's
leading online providers of fonts to consumers.
2. Which parts of Bitstream's business did Monotype Imaging acquire?
Monotype Imaging has acquired Bitstream's font business, which comprises
e-commerce solutions and OEM technologies. Solutions include Bitstream's popular
MyFonts.com website, featuring 89,000 fonts from nearly 900 foundries, and
Bitstream's acclaimed WhatTheFont identification service, in addition to the
Bitstream typeface library. OEM assets include Bitstream's Font Fusion and
Bitstream Panorama font rendering and layout technologies, as well as a range of
fonts for embedded and mobile environments. Monotype Imaging has also acquired 10
patents, covering areas from OEM technologies to Bitstream's WhatTheFont
application.
3. Why did Monotype Imaging acquire the font business of Bitstream?
Monotype Imaging's mission is to be the first place to turn for typefaces,
technology and expertise that enable the best user experience and ensure brand
integrity regardless of device, platform or language. The addition of Bitstream's
font business is expected to enhance Monotype Imaging's ability to accelerate
growth across its customer base, expand the company's IP and capture emerging
opportunities, particularly in Web font services and Monotype Imaging's Display
Imaging business. In addition, the company believes that its global reach and
financial strength combined with Bitstream's renowned MyFonts website and OEM
business now position Monotype Imaging to serve broader markets, while continuing
to deliver high-quality experiences on any publishing medium, platform or device.
4. What is the background that led to the acquisition?
In September of 2010, Bitstream announced that it had hired a financial advisory
company to advise Bitstream with respect to business opportunities for enhancing
shareholder value. Monotype Imaging's interest in Bitstream's font business
stemmed from a fundamental passion for type, which is at the center of Monotype
Imaging's expertise. When the opportunity was presented to pursue Bitstream's
font business, Monotype Imaging saw this as natural fit. For example, Bitstream's
approach to serving broad markets by way of new and distinctive typefaces is
expected to complement Monotype Imaging's strength in leveraging its historic,
classic type collections and multilingual offering to meet the needs of
corporations and brands. Monotype Imaging believes the acquisition will dovetail
effectively with the company's team, technology and culture.
5. What parts of Bitstream did Monotype Imaging not acquire?
Monotype Imaging did not acquire Bitstream's BOLT mobile browsing and Pageflex?
variable data publishing technologies. As part of the agreement to acquire
Bitstream's font business, these other businesses were spun out to form a new
public company, Marlborough Software Development Holdings.
6. What were the financial terms of the transaction?
Monotype Imaging acquired Bitstream's font business in an all cash merger valued
at approximately $50 million, which included adjustments based on the closing net
asset value of Bitstream. To fund the acquisition, Monotype Imaging drew $25
million on the company's revolving line of credit.
7. How many Bitstream employees are joining Monotype Imaging?
Thirteen employees have joined Monotype Imaging from Bitstream's U.S. operation,
in addition to 42 engineers and type designers in Noida, India.
8. How are customers expected to benefit from the acquisition?
Monotype Imaging believes the acquisition will enhance the company's e-commerce
and Web font businesses through a greater selection of fonts and technology
solutions. For example, Monotype Imaging intends to support, promote and grow the
MyFonts brand and website, which is the resource of choice for a strong community
of loyal customers. Monotype Imaging anticipates that OEMs will also have access
to a greater portfolio of solutions, particularly in the company's Display
Imaging business. In addition, resources in India will not only contribute to
development and R&D functions but also custom type design, particularly for Indic
markets.
9. How is Monotype Imaging integrating Bitstream's font business?
Now that the acquisition has closed, Monotype Imaging is beginning to integrate
and work with Bitstream's products, services and personnel. Talent from Bitstream
is expected to positively impact Monotype Imaging's e-commerce and type design
and development teams, as well as Display Imaging sales. The company's
development and quality engineering resources have expanded substantially, with
the addition of 42 employees in India, who will continue to work from the
development facility in Noida.
10. What will happen to MyFonts?
MyFonts is recognized as one of the top e-commerce font websites in the world. It
features the WhatTheFont identification service, which enables people to quickly
and easily identify fonts. Unknown fonts are submitted as images, which are then
identified by Bitstream or people who use the site. Bitstream cultivated an
active creative community, helping to drive exciting, innovative design. The
company also delivered an excellent user experience and gave type designers
considerable control over the work and business. Monotype Imaging intends to
maintain MyFonts.com, with an eye toward supporting and extending the best
aspects of MyFonts within the company's cloud-based offerings.
11. How will Bitstream's OEM business be integrated?
Bitstream brings to Monotype Imaging highly experienced OEM professionals and a
complementary customer base that maps directly into the markets Monotype Imaging
serves, particularly in Display Imaging. The acquisition opens opportunity to
expand within Bitstream OEM accounts to provide additional value, while adding
depth to Monotype Imaging's family of OEM products and services.
12. Will Bitstream agreements continue to be honored?
Monotype Imaging will continue to honor the terms and conditions of all existing
agreements for current Bitstream customers.
Additional information about the merger is available on the SEC website by
accessing Monotype Imaging's Form 8-K, which announces the transaction and
includes the merger agreement.
MONOTYPE IMAGING HOLDINGS INC.
OTHER INFORMATION
RECONCILIATION OF CURRENT FORECASTED GAAP EARNINGS PER DILUTED
SHARE TO FORECASTED NON-GAAP EARNINGS PER DILUTED SHARE
(Unaudited and in thousands, except share and per share data)
Low End of GuidanceHigh End of Guidance
---------------------------------------
20122012
--------------------
GAAP net income$25,300$27,300
Amortization, net of tax6,4006,400
Share-based compensation, net of tax4,2004,200
--------------------
Non-GAAP net income35,90037,900
====================
GAAP earnings per diluted share$0.68$0.73
Amortization, net of tax, per diluted share0.170.17
Share-based compensation, net of tax, per diluted share0.110.11
--------------------
Non-GAAP earnings per diluted share$0.96$1.01
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings37,500,00037,500,000
per share
Assumes 36% effective tax rate.
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF PREVIOUSLY FORECASTED GAAP EARNINGS PER
DILUTED SHARE TO FORECASTED NON-GAAP EARNINGS PER DILUTED SHARE
(Unaudited and in thousands, except share and per share data)
Low End of GuidanceHigh End of Guidance
---------------------------------------
20122012
--------------------
GAAP net income$25,300$27,300
Amortization, net of tax5,2005,200
Share-based compensation, net of tax4,2004,200
--------------------
Non-GAAP net income34,70036,700
====================
GAAP earnings per diluted share$0.68$0.73
Amortization, net of tax, per diluted share0.140.14
Share-based compensation, net of tax, per diluted share0.110.11
--------------------
Non-GAAP earnings per diluted share$0.93$0.98
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings37,500,00037,500,000
per share
Assumes 36% effective tax rate.
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF PREVIOUSLY FORECASTED GAAP OPERATING INCOME
TO FORECASTED NON-GAAP NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of GuidanceHigh End of Guidance
--------------------------------------
20122012
-------------------
GAAP operating income$41,200$44,200
Depreciation and amortization9,3009,300
Share-based compensation6,5006,500
-------------------
Non-GAAP net adjusted EBITDA$57,000$60,000
========= =================== ==========
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF CURRENT FORECASTED GAAP OPERATING INCOME TO
FORECASTED NON-GAAP NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of GuidanceHigh End of Guidance
--------------------------------------
20122012
-------------------
GAAP operating income$41,300$45,300
Depreciation and amortization11,20011,200
Share-based compensation6,5006,500
-------------------
Non-GAAP net adjusted EBITDA$59,000$63,000
========= =================== ==========
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECASTED GAAP EARNINGS PER DILUTED SHARE TO
FORECASTED NON-GAAP EARNINGS PER DILUTED SHARE
(Unaudited and in thousands, except share and per share data)
Low End of GuidanceHigh End of Guidance
---------------------------------------
Q1 2012Q1 2012
--------------------- ----------------------
GAAP net income$5,700$6,200
Amortization, net of tax1,3001,300
Share-based compensation, net of tax1,1001,100
--------------------
Non-GAAP net income$8,100$8,600
========= ==================== ==========
GAAP earnings per diluted share$0.15$0.17
Amortization, net of tax, per diluted share0.030.03
Share-based compensation, net of tax, per diluted share0.030.03
--------------------
Non-GAAP earnings per diluted share$0.21$0.23
========= ==================== ==========
Weighted average diluted shares used to compute non-GAAP earnings37,300,00037,300,000
per share
Assumes 37% effective tax rate.
MONOTYPE IMAGING HOLDINGS INC.
RECONCILIATION OF FORECASTED GAAP OPERATING INCOME TO
FORECASTED NON-GAAP NET ADJUSTED EBITDA
(Unaudited and in thousands)
Low End of GuidanceHigh End of Guidance
--------------------------------------
Q1 2012Q1 2012
-------------------- ----------------------
GAAP operating income$9,400$10,400
Depreciation and amortization2,3002,300
Share-based compensation1,8001,800
-------------------
Non-GAAP net adjusted EBITDA$13,500$14,500
========= =================== ==========
SOURCE: Monotype Imaging Holdings Inc.
Monotype Imaging Inc.
Vikki Quick, 781-970-6115
vikki.quick@monotypeimaging.com
or
Investor Relations:
Staci Mortenson, 781-970-6120
ir@monotypeimaging.com |
